Slots panel may deny city, Arundel bids

Julie Bykowicz | julie.bykowicz@baltsun.com

Commissioners handing out Maryland's slots licenses expressed grave concerns Wednesday about the proposals for lucrative gambling casinos in Baltimore and Anne Arundel County - and said they might toss out those applications if questions can't be resolved quickly.

The panel made some progress Wednesday, granting a license for a 1,500-machine facility in Cecil County. But it also set a Dec. 17 deadline for issues to be resolved with the Arundel and Baltimore bids.

Members of the slots licensing panel said they are frustrated that they can't award the Arundel license because a divided seven-member County Council has been slow to approve the zoning change needed for a 4,750-machine facility that would rise near Arundel Mills mall. Local officials have discussed zoning issues for months but have yet to act.

The Baltimore proposal is even further behind, commissioners said, because the developers have not paid a required $19.5 million licensing fee and because it's unclear who would be financing and running the proposed 3,750-machine facility near the city sports stadiums.

Despite promises of fees and information about the makeup of the Baltimore City Entertainment Group, "we still sit here with nothing today," said Chairman Donald C. Fry. "That's very disturbing."

If the two applications are rejected and the panel starts over, it would mean a delay in the hundreds of millions of dollars a year that state officials hope will help balance future budgets. Maryland voters approved slots parlors at five locations last fall.

Commissioners said they feared they might shoulder some of the blame if slots revenues don't begin flowing soon, at a time when Maryland faces a $2 billion revenue shortfall. Casino operators would turn over 67 percent of revenues to the state.

"At some point, we've got to bring this to some conclusion," Commissioner Robert R. Neall said of the casino licensing process, which began in February.

Fry said rejecting the applications "will certainly be an option" if the issues are not resolved by the deadline date, which coincides with one of the commission meetings. "We're sending a message that we're very much interested in being in a position to resolve our work by that date," he said.

Casino at PerryvilleThe license granted on Wednesday allows Penn National, which also runs Charles Town Races and Slots in West Virginia, to open a casino in Perryville near Interstate 95 and the Susquehanna River. The commission has also approved an 800-slots parlor at a racetrack near Ocean City. That site could be open by Memorial Day, and a Penn National official said theirs could be up and running by next October.

Fry said Anne Arundel's inaction on rezoning land near Arundel Mills, where Baltimore developer David Cordish wants to build a casino, "is hampering our ability to move forward."

The state lottery commission, which regulates gambling, has signed off on the necessary background checks for Cordish and his associates. If county zoning were in place, commissioners could have considered granting Cordish a license at their November meeting.

Commissioner Thomas Barbera said that if the Anne Arundel County Council fails to rezone the mall, the state panel should throw out Cordish's application. So far, Barbera said, the council is signaling it doesn't want a casino at the mall.

Barbera and Commissioner D. Bruce Poole said they would not give Cordish a license until the county has approved zoning, even though some County Council members have said they wanted the state to act first.

Earlier this week, a pro-slots Arundel councilman introduced a bill to rezone the mall area, but the council chairwoman, who has not publicly taken a position on slots, offered a competing plan that would put the casino in an industrial area farther south. Cordish has no interest in that area. Both proposals will be considered Dec. 7, and a vote could be taken that evening.

"I'm ready to go with it," said Councilman Ronald C. Dillon Jr., who favors the Cordish development. "I hope the council members clearly see the consequences of this proposal not moving forward. I'm personally worried that if we don't find revenue soon, the citizens of this county will see a drastic reduction in services."

The county could collect an estimated $30 million in taxes and fees from the casino each year.

County Executive John R. Leopold said Wednesday that he is "cautiously optimistic" the council will approve zoning for slots at Arundel Mills and called the proposal for slots at another site a "de facto prohibition on slots that would clearly step on the voices of the people."

Gov. Martin O'Malley reiterated in an interview this week that the County Council must act. "They need to make their decision, whatever that decision is," he said. "We need to move forward."

Meanwhile, the Baltimore group has not turned over key information on its principals to the lottery commission, and hasn't updated its February application for a 500-slot parlor.

Members of the group have said they want to build a 3,750-terminal facility in a different location than the one in the original application, which would require new paperwork and a much larger licensing fee.

They hinted more recently that they would like to expand to 4,750 if possible.

Neall compared the Baltimore situation to "painting a merry-go-round with the horses going up and down."

"There are changes that they say are being made, but that we haven't seen, and there hasn't been as much on background and financial information as we need," said Neall, a former Arundel county executive and state senator known for his fiscal acumen, after the commission meeting. "Who are the real operators and investors? We have no idea."

Representatives from Baltimore City Entertainment Group defended their slots application, saying they needed to lock down details with the city before addressing the state's concerns.

Mystery investorMichael Moldenhauer, a Canadian homebuilder who has a 93 percent stake in the casino, said his group plans to meet with state officials next week to work out a process for submitting the fee and a new application.

Moldenhauer said he felt that his group "needed to reach an agreement with Baltimore" before moving forward with the amended proposal. "We didn't want to be presumptuous," he said. "This has been a complicated and lengthy process."

The city's Board of Estimates approved a land deal to allow the casino to go forward earlier Wednesday, a complex transaction that requires the casino operator to pay 2.99 percent of gross gaming revenues to the city in return for building on city land.

City officials also defended the process.

"Negotiating the land deal with the city consumed BCEG's attention for the last several months," said Baltimore First Deputy Mayor Andrew B. Frank. "Now BCEG can turn its attention to meeting the commission's requirements within the deadline imposed."

Wednesday's land deal included a list of four partners in the project and left open the possibility that a fifth, unnamed entity would join the group. Moldenhauer declined to reveal the identity of the mystery investor.